Mark Zuckerberg has outlined plans to continue to control Meta’s costs during what he considers a “productive year” for the social media company, when its stock skyrocketed against projected sales. advice, cost reduction guidance and new $40 billion worth of stock buybacks.
metaThe company, which owns Facebook, Instagram and WhatsApp, reported fourth-quarter revenue of $32.2 billion on Wednesday, down 4% year-over-year, but at the top of the guide and slightly above that. with analyst estimates.
The company also slashed its 2023 cost outlook by $5 billion and announced an additional $40 billion for share buybacks.
Meta shares were up about 19% in after-hours trading. If that gain holds, it would add about $76 billion to its market value, according to Bloomberg data, largely reversing the $89 billion gain in third-quarter results amid a backdrop investors worried about its costly metaverse bet.
Fourth-quarter results paint a brighter picture for Meta, which has been hit over the past year by an economic downturn that prompted marketers to cut spending, coupled with increasingly stiff competition from TikTok and challenges in regulating and measuring ad campaigns following Apple’s privacy changes.
However, its profits fell significantly during the quarter, caused by restructuring costs of $4.2 billion during the quarter related to facility consolidation, job cuts and decommissioning multiple data centers. Fourth-quarter net income fell 55% to $4.7 billion, compared with consensus estimates for a drop to $6 billion.
At the start of the call with investors, Zuckerberg optimistically said “management topics for 2023. . . effective year”. He said Meta is currently focused on removing some layers of middle management, cutting back on low-performing projects and implementing artificial intelligence tools to help its engineers work more efficiently. .
“There’s a lot more we can do to improve our productivity, speed, and cost structure,” Zuckerberg said. “The year 2022 is a challenging year. But I think we’ve finally made good progress on our key priorities and are well prepared to deliver better results this year, as long as we continue to drive performance.”
Meta, the company has expanded the number of employees rapidly since the beginning pandemic caused by corona virussought to reduce costs as Wall Street increasingly questioned its loss-making efforts to build a digital world full of avatars known as the metaverse.
As with many other virtual and augmented reality projects, it is not expected that they will turn a profit for many years. In the fourth quarter, revenue from Reality Labs, its metaverse unit, fell to $727 million from $877 million a year ago, while a loss was $4.3 billion over $3.3 billion the previous year.
In November, Meta announced its largest round of layoffs, laying off 11,000 employees, or about 13% of its total staff. It also offers other measures such as reducing budgets and employee perks, and shrinking its “real estate footprint”.
On Wednesday, the company forecast revenue for the current quarter between $26 billion and $28.5 billion. It also predicted 2023 costs in the $89 billion-$95 billion range, down from the previous outlook of $94 billion-$100 billion, due to “slower predicted growth in costs” salary and cost of revenue”.
It expects an additional $1 billion in restructuring fees, down from a previous estimate of $2 billion. It forecasts revenue for the current quarter as high as $28.5 billion.
On a call with analysts, Zuckerberg said that the company’s investment in AI has paid off, allowing the company to recommend more relevant short-form video content to users thanks to the Reels feature, as well as helping Brands automate, target and measure their marketing campaigns.
He also said that he hopes that Meta will become a “leader” in the field of general AI, a rapidly emerging technology that can be used to produce novel content such as graphics or literature. “You’re going to see us roll out some different things this year,” Zuckerberg said.
Meta’s growing user base is also still a bright spot. Monthly active users on one or more of its apps grew 4% to 3.74 billion in the fourth quarter, while the number of users for a specific Facebook app grew 2% to 2.96 billion.
Lloyd Walmsley, analyst at UBS, said in a note that he could “see a path towards double-digits”. [revenue] growth” by the end of 2023, as well as strong earnings per share growth. “These results show a significant improvement around the main and . . . In our view, the stock is owned by long-term investors.”
Additional reporting by Nicholas Megaw
